Although Amazon recently launched an AWS management console that will make it easier for VMware users to shift workloads to AWS, this might not materially affect VMware.

Amazon(NASDAQ:AMZN) recently launched an AWS management console that is supposed to make it easier for users to port VMware (NYSE:VMW) virtual machines into the cloud. Customers who use VMware infrastructure can install the AWS Management Portal for vCenter as a plug-in and use it to manage their AWS infrastructure. The management console includes support for Amazon EC2 as well as VM Import.

The AWS management console is a thinly veiled attack on VMware, which went down in history books as the first company to successfully virtualize x86 architectures. The current situation is, ironically, eerily reminiscent of how VMware pushed its way into enterprise data centers using its ESX Hypervisor some years back.

So, what does Amazon's move mean for VMware, and does it threaten its existence?

Attack on VMware's private cloudThe upshot of the new AWS tool is that it will now be easier for organizations to try out hybrid data centers, and the reduced friction of shifting virtual machines to AWS's EC2 might entice companies to consider moving to the cloud. VMware has its vCloud Hybrid Service, or vCHS, which does, more or less, what AWS's management console will do, the big difference being that it's directed to the private cloud.

If VMware will be negatively affected by the new AWS tool, then Microsoft (NASDAQ:MSFT), by extension, will also quite likely feel some heat as well, as it is widely regarded as an alternative to VMware for commercially supported hypervisors. Microsoft has a robust hybrid cloud strategy, while AWS is still seen as a laggard, since its Direct Connect cloud service has yet to gain traction.

Not surprisingly, VMware provided a quick rebuttal. VMware CTO, Chris Wolf, pointed out the flaws inherent in the new software and advised users not to be ''fooled by import tools that are disguised as hybrid cloud management tools.''

According to Wolf, hybrid cloud architectures require minimal variations because, the more varied the architecture, the more costly it becomes to scale out. He also pointed out that moving workloads from VMware to AWS will be a complex process. AWS suffers from limitations such as lack of granularity, compared to VMware. The service primarily ties CPU to memory, which makes it wasteful to shift certain VM workloads to AWS.

Server virtualization still going strong, but slowingA server and virtualization study done by 451 Research late in 2013 found that, although spending on server virtualization projects (VMware's forte) is still strong, 41% of respondents said that they will spend less in 2014. Infrastructure spending will also decrease, with attention shifting to software-defined data centers. Another key finding of the study was that VMware will increasingly face more competition in virtualized data centers, hybrid clouds, and private clouds.

But, perhaps the most important takeaway was that only 2% of respondents planned to spend money on public clouds due to issues such as lack of technology readiness, compliance, and regulatory issues.

According to a Gartner report, close to half of all large organizations will use a hybrid cloud strategy by 2017. Microsoft's cloud is the fastest-growing of all clouds, and the company's new cloud vision includes a willingness to maintain a vendor-agnostic position that allows other vendors to connect to Azure. The company's recent cloud deal with Salesforce.com was one instance of this.

It's very likely that Microsoft's hybrid strategy is one of the major reasons the company is growing so fast. Hybrid clouds are a combination of public and private clouds. Using this strategy, workloads that are not very security-sensitive are moved to the public cloud, while more sensitive data remains in the private cloud.

There is little doubt that the future of the cloud is hybrid, and AWS understands this. Meanwhile, VMware has a huge partner ecosystem of more than 55,000 companies and organizations. The company is still going strong and recorded a solid first quarter in 2014 that beat both top and bottom-line estimates.

VMware is seeing strong demand for its vCloud software suite, a tool that helps virtualize networks and associated security services, as well as servers and storage space. About half of the license deals signed in the first quarter included the product. License revenue accounts for 25%-33% of VMware's revenue.

Plenty of room to runVMware's cloud service is classified as a niche player, which eliminates a lot of direct competition with other top players. Forrester Research predicts that businesses will spend $72 billion on cloud services this year, and that figure will grow at a CAGR of 21.4% through 2020 to reach $230 billion. So, there is still plenty of room to run for the cloud leaders.

Although VMware and AWS might be on a collision path as far as cloud management tools are concerned, there is no reason to believe that this will materially affect VMware. A little competition is, after all, healthy for customers, as it might force the two companies to develop top-notch hybrid cloud products.